v3.25.2
FINANCING ACTIVITIES
 6 Months Ended
Jun. 30, 2025
Debt Disclosure [Abstract]  
FINANCING ACTIVITIES FINANCING ACTIVITIES
The disclosures in this note apply to all Registrants, unless indicated otherwise.

Common Stock (Applies to AEP)

At-the-Market (ATM) Program

In 2024, approximately $0.4 billion of common stock was offered and sold under the ATM program. There were no issuances under the ATM program for the six months ended June 30, 2025. Approximately $1.3 billion of equity is available for issuance under the ATM program upon the filing of a prospectus supplement.

Forward Sale of Equity

In March 2025, AEP entered into separate forward sale agreements with nonaffiliated forward purchasers relating to 22,549,020 shares of AEP’s common stock at an initial price of $102.00 per share, exclusive of an underwriting discount equal to $2.244 per share. Except in certain specified circumstances that would require physical share settlement, AEP may elect to settle the forward sale transaction by means of physical, cash or net share settlement. The timing of the settlement of the forward sale agreements is also at AEP’s discretion and management currently expects settlement to occur on or prior to December 31, 2026. To the extent the forward sale agreements are physically settled, AEP will issue common stock to the forward purchasers and receive cash proceeds based on the applicable forward sale price on the settlement date as defined in the forward sale agreements. As of June 30, 2025, AEP expects approximately $2.25 billion of net cash proceeds from the full physical settlement of the forward sale agreements and management anticipates using any future proceeds for general corporate purposes, which may include capital contributions to utility subsidiaries, acquisitions or repayment of debt. The forward sale transactions will be classified as equity transactions because they are indexed to AEP’s common stock and physical settlement is within AEP’s control.

Long-term Debt Outstanding (Applies to AEP)

The following table details long-term debt outstanding, net of issuance costs and premiums or discounts:
Type of DebtJune 30, 2025December 31, 2024
 (in millions)
Senior Unsecured Notes$37,019.1 $36,410.9 
Pollution Control Bonds1,730.3 1,771.3 
Notes Payable644.5 609.9 
Securitization Bonds1,021.0 578.0 
Spent Nuclear Fuel Obligation (a)323.2 316.3 
Junior Subordinated Notes2,581.2 2,579.1 
Other Long-term Debt1,206.2 377.3 
Total Long-term Debt Outstanding44,525.5 42,642.8 
Long-term Debt Due Within One Year3,212.4 3,335.0 
Long-term Debt$41,313.1 $39,307.8 

(a)Pursuant to the Nuclear Waste Policy Act of 1982, I&M, a nuclear licensee, has an obligation to the United States Department of Energy for SNF disposal. The obligation includes a one-time fee for nuclear fuel consumed prior to April 7, 1983. Trust fund assets related to this obligation were $375 million and $367 million as of June 30, 2025 and December 31, 2024, respectively, and are included in Spent Nuclear Fuel and Decommissioning Trusts on the balance sheets.
Long-term Debt Activity

Long-term debt and other securities issued, retired and principal payments made during the first six months of 2025 are shown in the following tables:
PrincipalInterest
CompanyType of DebtAmount (a)RateDue Date
Issuances: (in millions)(%)
AEP TexasOther Long-term Debt$400.0 Variable2026
AEPTCoSenior Unsecured Notes425.0 5.382035
APCoOther Long-term Debt425.0 Variable2026
APCoPollution Control Bonds104.4 3.702028
I&MNotes Payable100.0 4.892029
I&MPollution Control Bonds150.03.702029
PSOSenior Unsecured Notes800.0 5.452036
Non-Registrant:
KPCoOther Long-term Debt150.0 Variable2026
KPCoSecuritization Bonds477.7 5.302045
Transource EnergyOther Long-term Debt29.5 Variable2025
WPCoOther Long-term Debt125.0 Variable2026
Total Issuances$3,186.6 

(a)Amounts indicated on the statements of cash flows are net of issuance costs and premium or discount and will not tie to the issuance amounts.
PrincipalInterest
CompanyType of DebtAmount PaidRateDue Date
Retirements and Principal Payments:
(in millions)(%)
AEP TexasSecuritization Bonds$10.3 2.062025
AEP TexasSecuritization Bonds1.9 2.292029
AEPTCoSenior Unsecured Notes50.0 3.662025
AEPTCoSenior Unsecured Notes40.0 3.762025
APCoOther Long-term Debt0.1 13.722026
APCoPollution Control Bonds104.4 3.752025
APCoSecuritization Bonds13.9 3.772028
APCoSenior Unsecured Notes300.0 3.402025
I&MNotes Payable1.1 Variable2025
I&MNotes Payable2.6 0.932025
I&MNotes Payable7.5 3.442026
I&MNotes Payable8.7 5.932027
I&MNotes Payable10.1 6.012028
I&MNotes Payable16.3 6.412028
I&MNotes Payable3.5 4.892029
I&MOther Long-term Debt0.2 6.002025
I&MPollution Control Bonds40.0 0.752025
I&MPollution Control Bonds50.0 2.752025
I&MPollution Control Bonds100.0 3.052025
PSOOther Long-term Debt0.3 3.002027
PSOSenior Unsecured Notes125.0 3.172025
Non-Registrant:
KPCoOther Long-term Debt150.0 Variable2025
KPCoOther Long-term Debt150.0 Variable2026
Transource EnergySenior Unsecured Notes1.2 2.752050
WPCoSenior Unsecured Notes122.0 3.702025
WPCoNotes Payable15.0 6.892034
Total Retirements and Principal Payments
$1,324.1 

Financing Activities Subsequent Events

In July 2025, AEGCo retired $45 million of Pollution Control Bonds.

In July 2025, I&M retired $10 million of Notes Payable related to DCC Fuel.

In July 2025, Transource Energy issued $4 million of variable rate Other Long-term Debt due in 2028.

In July 2025, AEP made a capital contribution of $200 million to AEP Texas.

Debt Covenants (Applies to AEP and AEPTCo)

Covenants in AEPTCo’s note purchase agreements and indenture limit the amount of contractually-defined priority debt (which includes a further sub-limit of $50 million of secured debt) to 10% of consolidated tangible net assets. AEPTCo’s contractually-defined priority debt was 0.3% of consolidated tangible net assets as of June 30, 2025. The method for calculating the consolidated tangible net assets is contractually-defined in the note purchase agreements.
Dividend Restrictions

Utility Subsidiaries’ Restrictions

Parent depends on its utility subsidiaries to pay dividends to shareholders. AEP utility subsidiaries pay dividends to Parent provided funds are legally available. Various financing arrangements and regulatory requirements may impose certain restrictions on the ability of the subsidiaries to transfer funds to Parent in the form of dividends.

All of the dividends declared by AEP’s utility subsidiaries that provide transmission or local distribution services are subject to a Federal Power Act requirement that prohibits the payment of dividends out of capital accounts in certain circumstances; payment of dividends is generally allowed out of retained earnings. The Federal Power Act also creates a reserve on earnings attributable to hydroelectric generation plants. Because of their ownership of such plants, this reserve applies to APCo and I&M.

Certain AEP subsidiaries have credit agreements that contain covenants that limit their debt to capitalization ratio to 67.5%. The method for calculating outstanding debt and capitalization is contractually-defined in the credit agreements.

The Federal Power Act restriction does not limit the ability of the AEP subsidiaries to pay dividends out of retained earnings.

Parent Restrictions (Applies to AEP)

The holders of AEP’s common stock are entitled to receive the dividends declared by the AEP Board provided funds are legally available for such dividends. Parent’s income primarily derives from common stock equity in the earnings of its utility subsidiaries.

Pursuant to the leverage restrictions in credit agreements, AEP must maintain a percentage of debt to total capitalization at a level that does not exceed 67.5%. The method for calculating outstanding debt and capitalization is contractually-defined in the credit agreements.

Corporate Borrowing Program (Applies to all Registrant Subsidiaries)

AEP subsidiaries use a corporate borrowing program to meet their short-term borrowing needs. The corporate borrowing program includes a Utility Money Pool, which funds AEP’s utility subsidiaries; a Nonutility Money Pool, which funds certain AEP nonutility subsidiaries; and direct borrowing from AEP. The AEP Utility Money Pool operates in accordance with the terms and conditions of its agreement filed with the FERC. The amounts of outstanding loans to (borrowings from) the Utility Money Pool as of June 30, 2025 and December 31, 2024 are included in Advances to Affiliates and Advances from Affiliates, respectively, on the Registrant Subsidiaries’ balance sheets. The Utility Money Pool participants’ money pool activity and corresponding authorized borrowing limits for the six months ended June 30, 2025 are described in the following table:
MaximumAverageNet Loans to
BorrowingsMaximumBorrowingsAverage(Borrowings from)Authorized
from theLoans to thefrom theLoans to thethe Utility MoneyShort-term
UtilityUtilityUtilityUtilityPool as ofBorrowing
CompanyMoney PoolMoney PoolMoney PoolMoney PoolJune 30, 2025Limit
 (in millions)
AEP Texas$468.4 $112.8 $182.7 $62.5 $(109.5)$600.0 
AEPTCo403.6 312.2 192.0 39.8 32.7 820.0 (a)
APCo263.5 242.1 141.3 30.0 (154.8)750.0 
I&M145.2 19.3 77.2 6.1 (25.7)500.0 
OPCo270.9 165.9 71.6 81.7 (203.0)600.0 
PSO505.1 391.5 204.1 167.0 (319.7)750.0 
SWEPCo471.9 76.3 285.9 10.2 76.3 750.0 

(a)    Amount represents the combined authorized short-term borrowing limit the State Transcos have from FERC or state regulatory commissions.
The activity in the above table does not include short-term lending activity of certain AEP nonutility subsidiaries. AEP Texas’ wholly-owned subsidiary, AEP Texas North Generation Company, LLC and SWEPCo’s wholly-owned subsidiary, Mutual Energy SWEPCo, LLC participate in the Nonutility Money Pool. The amounts of outstanding loans to the Nonutility Money Pool as of June 30, 2025 and December 31, 2024 are included in Advances to Affiliates on the subsidiaries’ balance sheets. The Nonutility Money Pool participants’ activity for the six months ended June 30, 2025 is described in the following table:
Maximum Loans Average Loans Loans to the Nonutility
to the Nonutility to the Nonutility Money Pool as of
CompanyMoney PoolMoney PoolJune 30, 2025
(in millions)
AEP Texas$7.2 $7.1 $7.1 
SWEPCo2.4 2.3 2.4 

AEP has a direct financing relationship with AEPTCo to meet its short-term borrowing needs. The amounts of borrowings from AEP as of June 30, 2025 and December 31, 2024 are included in Advances from Affiliates on AEPTCo’s balance sheets. AEPTCo’s direct financing activities with AEP and corresponding authorized borrowing limit for the six months ended June 30, 2025 are described in the following table:
BorrowingsAuthorized
MaximumMaximumAverageAveragefrom AEPLoans toShort-term
BorrowingsLoansBorrowingsLoansas of AEP as ofBorrowing
Companyfrom AEP to AEP from AEP to AEP June 30, 2025June 30, 2025Limit (a)
(in millions)
AEPTCo Parent$106.6 $132.6 $13.6 $38.2 $10.5 $— $— 
SWTCo2.0 — 1.9 — 2.0 — 50.0 
Midwest Transmission Holdings— 32.6 — 11.0 — — — 

(a)    Amount represents the authorized short-term borrowing limit from FERC or state regulatory agencies not otherwise included in the utility money pool above.

The maximum and minimum interest rates for funds either borrowed from or loaned to the Utility Money Pool are summarized in the following table:
 Six Months Ended June 30,
20252024
Maximum Interest Rate4.83 %5.79 %
Minimum Interest Rate4.14 %5.14 %

The average interest rates for funds borrowed from and loaned to the Utility Money Pool are summarized in the following table:
Average Interest Rate for FundsAverage Interest Rate for Funds
Borrowed from the Utility Money PoolLoaned to the Utility Money Pool
for Six Months Ended June 30,for Six Months Ended June 30,
Company2025202420252024
AEP Texas4.69 %5.70 %4.72 %5.49 %
AEPTCo4.68 %5.71 %4.62 %5.62 %
APCo4.69 %5.73 %4.58 %5.64 %
I&M4.69 %5.67 %4.64 %5.68 %
OPCo4.65 %5.70 %4.70 %5.52 %
PSO4.67 %5.64 %4.68 %— %
SWEPCo4.69 %5.64 %4.65 %— %
Maximum, minimum and average interest rates for funds loaned to the Nonutility Money Pool are summarized in the following table:
Six Months Ended June 30, 2025Six Months Ended June 30, 2024
  Maximum Minimum AverageMaximum Minimum Average
  Interest Rate Interest Rate Interest RateInterest Rate Interest Rate Interest Rate
  for Funds for Funds for Fundsfor Funds for Funds for Funds
 Loaned to Loaned to Loaned toLoaned to Loaned to Loaned to
 the Nonutility the Nonutility the Nonutilitythe Nonutility the Nonutility the Nonutility
Company Money Pool Money Pool Money PoolMoney Pool Money Pool Money Pool
AEP Texas 4.76 %4.64 %4.70 %5.79 %5.56 %5.69 %
SWEPCo 4.76 %4.64 %4.70 %5.79 %5.56 %5.68 %

AEPTCo’s maximum, minimum and average interest rates for funds either borrowed from or loaned to AEP are summarized in the following table:

 MaximumMinimumMaximumMinimumAverageAverage
 Interest RateInterest RateInterest RateInterest RateInterest RateInterest Rate
Six Months for Fundsfor Fundsfor Fundsfor Fundsfor Fundsfor Funds
Ended BorrowedBorrowedLoanedLoanedBorrowedLoaned
June 30, from AEP from AEPto AEP to AEP from AEP to AEP
2025 4.76 %4.63 %4.76 %4.63 %4.69 %4.69 %
2024 5.79 %5.55 %5.79 %5.55 %5.68 %5.68 %

Short-term Debt (Applies to AEP and SWEPCo)

Outstanding short-term debt was as follows:
 June 30, 2025December 31, 2024
OutstandingInterestOutstandingInterest
CompanyType of DebtAmountRate (a)AmountRate (a)
 (dollars in millions)
AEPSecuritized Debt for Receivables (b)$900.0 4.57 %$900.0 4.73 %
AEPCommercial Paper600.0 4.62 %1,618.3 4.70 %
SWEPCoNotes Payable1.6 6.68 %5.5 6.69 %
Total Short-term Debt$1,501.6  $2,523.8  

(a)Weighted-average rate as of June 30, 2025 and December 31, 2024, respectively.
(b)Amount of securitized debt for receivables as accounted for under the “Transfers and Servicing” accounting guidance.

Credit Facilities

For a discussion of credit facilities, see “Letters of Credit” section of Note 5.
Securitized Accounts Receivables – AEP Credit (Applies to AEP)

AEP Credit has a receivables securitization agreement with bank conduits. Under the securitization agreement, AEP Credit receives financing from the bank conduits for the interest in the receivables AEP Credit acquires from affiliated utility subsidiaries. These securitized transactions allow AEP Credit to repay its outstanding debt obligations, continue to purchase the operating companies’ receivables and accelerate AEP Credit’s cash collections.

AEP Credit’s receivables securitization agreement provides a commitment of $900 million from bank conduits to purchase receivables and expires in September 2026. As of June 30, 2025, the affiliated utility subsidiaries were in compliance with all requirements under the agreement.

Accounts receivable information for AEP Credit was as follows:
Three Months Ended June 30,Six Months Ended June 30,
2025202420252024
(dollars in millions)
Effective Interest Rates on Securitization of Accounts Receivable
4.53 %5.51 %4.57 %5.56 %
Net Uncollectible Accounts Receivable Written-Off$6.1 $5.8 $13.9 $13.9 

June 30, 2025December 31, 2024
(in millions)
Accounts Receivable Retained Interest and Pledged as Collateral Less Uncollectible Accounts
$1,233.9 $1,117.0 
Short-term – Securitized Debt of Receivables900.0 900.0 
Delinquent Securitized Accounts Receivable 58.5 56.2 
Bad Debt Reserves Related to Securitization45.1 44.5 
Unbilled Receivables Related to Securitization390.6 335.5 

AEP Credit’s delinquent customer accounts receivable represent accounts greater than 30 days past due.

Securitized Accounts Receivables – AEP Credit (Applies to all Registrant Subsidiaries except AEP Texas and AEPTCo)

Under this sale of receivables arrangement, the Registrant Subsidiaries sell, without recourse, certain of their customer accounts receivable and accrued unbilled revenue balances to AEP Credit and are charged a fee based on AEP Credit’s financing costs, administrative costs and uncollectible accounts experience for each Registrant Subsidiary’s receivables. APCo does not have regulatory authority to sell its West Virginia accounts receivable. The costs of customer accounts receivable sold are reported in Other Operation expense on the Registrant Subsidiaries’ statements of income. The Registrant Subsidiaries manage and service their customer accounts receivable, which are sold to AEP Credit. AEP Credit securitizes the eligible receivables for the operating companies and retains the remainder.

The amount of accounts receivable and accrued unbilled revenues under the sale of receivables agreements were:
CompanyJune 30, 2025December 31, 2024
 (in millions)
APCo$197.4 $192.7 
I&M182.9 160.5 
OPCo477.4 470.7 
PSO158.1 111.4 
SWEPCo189.7 153.5 
The fees paid to AEP Credit for customer accounts receivable sold were:
 Three Months Ended June 30,Six Months Ended June 30,
Company2025202420252024
 (in millions)
APCo$3.3 $3.9 $7.2 $8.1 
I&M3.5 3.8 7.0 7.9 
OPCo7.5 7.4 14.9 14.8 
PSO2.8 3.4 5.7 6.8 
SWEPCo3.7 4.3 7.8 9.1 
The proceeds on the sale of receivables to AEP Credit were:
 Three Months Ended June 30,Six Months Ended June 30,
Company2025202420252024
(in millions)
APCo$429.8 $447.3 $1,034.6 $983.3 
I&M545.4 502.1 1,130.2 1,031.8 
OPCo735.2 771.5 1,595.5 1,617.2 
PSO431.9 425.0 806.7 786.6 
SWEPCo456.0 471.9 884.1 897.3